Urban distribution starts with purchasing

Amsterdam’s largest employers include its universities (VU University Amsterdam, the University of Amsterdam and the Amsterdam University of Applied Sciences), healthcare provider Cordaan, the city of Amsterdam and the police department. Their degree courses, departments and services are spread across hundreds of locations throughout the city. Every single day, the locations are supplied with paper for printers, food and beverages, maintenance products, cleaning supplies, paving stones for side walks and much, much more. And every single day, those locations produce considerable waste flows. All this results in a lot of small-scale transport in the city. Is this really sustainable?

Clean and sustainable cities are attractive places to live, to work and to enjoy life – and, not least, to invest in. Couldn’t the supplying of Amsterdam be smarter and cleaner by consolidating the flows of goods at the suppliers or at urban distribution centers, by having them delivered at night or by arranging deliveries over the canals? Shouldn’t the supplying of goods be an integral part of sustainable and socially responsible purchasing?   It seems so obvious, right?

Students at the Amsterdam University of Applied Sciences (HvA) did a research project for their City Logistics course. What seems to be so obvious turns out to be anything but that. The students discovered that the purchasing was divided among over 10,000 suppliers as a result of so many decentralized buyers.

With “spend management,” purchasers know exactly what they are buying, but not in what volumes, for which specific locations and where supply points can still be found in the internal chain. Practically all products are purchased “delivered duty paid” (DDP), which means there’s no insight into the transportation costs for those final yards into the city. The flows of goods of companies that provide services, such as catering and cleaning, remain entirely out of scope.

Urgent need

Urban distribution starts with smart purchasing. Know what you are buying, in volume, and understand the transportation costs of the purchasing flows. When purchasing, look expressly at the “cost to serve” of the purchasing categories. What costs and benefits go along with other supply concepts? Break open the “DDP” conditions. There is an urgent need for a new Incoterm: “supply to urban distribution center”. Take a good look, together with service providers, at their in and outflow of goods.

A smarter and cleaner urban distribution can’t be achieved in a snap. Purchasers will need to sit down with both the product users and the suppliers to find the perfect balance between purchase price, handling, transportation and inventory costs. That will never work with 10,000 suppliers, of course. But it will work with a select number of strategic partners. Less is more! If purchasing flows are not consolidated earlier in the chain, it will be a problem to arrange for an effective flow to the many locations at a later stage.

A smart and clean urban distribution starts with purchasing. If you don’t do it for the sake of your children’s future, then at least do it because in a couple of years you might not even be allowed into the city any more…

Walther Ploos van Amstel is Associate Professor of Logistics aan de Vrije Universiteit Amsterdam